By Bradley Foster, Global Head of Content (Enterprise), Bloomberg.
Regulation following the 2008 financial crisis has had a profound effect on banks and buy side firms. Banks in particular are now much better capitalized and more liquid compared to a decade ago. We have seen a wave of new investor protection and market transparency regulation such as MiFiD II that increased the confidence of investors. All of this significantly mitigates the risk of another run on banks due to a crisis of confidence. At the same time, new regulation and supervision may increase the cost of doing business and brings technology, infrastructure and data challenges. As market participants move towards implementation and regulations become more clear, banks must take a much more risk based, data-driven approach to determine how they prioritize and address regulation.
That means asking certain key questions such as, what has regulation done in terms of impacting the client/business mix? How has it affected your business? And how are you utilising data to meet your regulatory requirements?
Irrespective of regulation, data is at the heart of what firms need in order to operate effectively. But regulation can and does inform that evolution. Take FRTB, for example. This complex regulation requires firms to have consistency, alignment and data provenance across their front, middle and back offices – a big ask. So firms must now think about regulation in the context of their overall data management strategy if they are going to recognize the efficiencies that make them effective.
Underpinning a lot of this is data and technology, where technology is ultimately seen as an enabler. If you are going to solve any problem in a scalable manner then you need a data management strategy and technology solution to make that happen. We are moving ever closer to a world where machines are consuming more and more data – so from a vendor perspective, a data management strategy must be approached from the perspective of creating and providing high quality,, clean and tidy and more comprehensive data to clients. All of this should be delivered in a way that is easily consumable by both humans and machines. Regulation is not only driving data management strategy, it is transforming how customers use data.